China's central bank said Thursday it would cut a benchmark ratio for the amount of cash banks must hold in reserve to "consolidate the foundation of economic recovery".
The reserve requirement ratio (RRR) would be slashed by 0.25 percent to around 7.4 percent from Friday, the People's Bank of China (PBOC) said in a statement.
It represents the third time the central bank has cut a key rate in the space of a few weeks, as China's economy continues to struggle following the end of its isolationist zero-Covid policy from late last year.
"At present, China's economic operations are sustaining their recovery... and social expectations continue to improve," the central bank said.
The cut excludes banks that have already implemented an RRR of five percent, the statement said.
The rate cut would "consolidate the foundation of economic recovery and maintain reasonable and sufficient liquidity", it added.
"We will implement prudent monetary policy accurately and effectively... and push the economy to achieve effective qualitative improvement and reasonable quantitative growth."
It comes ahead of the expected publication of key economic figures on Friday, which analysts forecast will show a modest improvement on previous months.